On 7 August 2026, goods from more than 60 countries and the European Union became subject to tariff rates of 10% or higher. It was the latest — and one of the largest — moves in a trade policy overhaul that's been reshaping US import costs throughout 2026, and it pushed America's overall tariff burden to a level not seen in nearly a century.
According to the Yale Budget Lab, US consumers are now facing an overall average effective tariff rate of 18.6% — the highest level seen since 1933. This isn't an abstract trade statistic. It shows up directly in the price of shoes, clothes, cars, and groceries.
Which Countries Are Affected, and By How Much
The tariff rates vary significantly by country of origin. Products from the European Union, Japan, and South Korea face a 15% tax rate, while imports from Taiwan, Vietnam, and Bangladesh are taxed at 20%. Brazil was hit hardest — a 50% tariff on Brazilian goods took effect in early August, one of the highest country-specific rates imposed.
This isn't a simple, settled policy — it has an unusually complicated legal history. The Supreme Court ruled in February 2026 that the IEEPA law does not authorize the president to impose these tariffs, invalidating the earlier "Liberation Day" reciprocal tariffs. The administration then invoked a different law, Section 122, to impose a 10% across-the-board surcharge — which was also challenged in court, though tariffs continued being collected while the case was appealed. The rates in effect today rest on this evolving and contested legal foundation.
What Actually Gets More Expensive — And By How Much
| Category | Short-Term Price Increase | Long-Term Increase |
|---|---|---|
| Shoes | +39% | +19% |
| Apparel / clothing | +37% | +18% |
| New cars | +12.4% (~$6,000) | +9.4% (~$4,500) |
| Overall food prices | +3.2% | +2.9% |
| Coffee (from Brazil, 50% tariff) | Significant increase expected | — |
The pattern here is consistent: goods that are difficult or slow to manufacture domestically — clothing, footwear, certain electronics — see the steepest price increases, because US retailers have limited ability to quickly substitute domestic alternatives.
A common misconception is that the exporting country pays the tariff. In practice, tariffs are collected from the US importer at the border, and that added cost is typically passed through to consumers via higher retail prices. The tariffs will reduce long-run GDP by imposing a wedge between the price a consumer pays and the price a producer receives — which ultimately reduces returns to labor, not just corporate profits.
Who Feels This Most
The impact isn't evenly distributed across income levels. The average federal tax rate will rise by 0.8 percentage points for households in the bottom income quintile — compared with a 0.6 percentage point increase for those in the top quintile. Tariffs function somewhat like a regressive tax: lower-income households spend a larger share of their budget on goods like clothing and food, which are among the categories most affected.
The Broader Economic Cost
Beyond the household-level price increases, economists estimate the imposed and scheduled tariffs will reduce long-run US GDP by 0.4%, shrink the capital stock by 0.3%, and cost 345,000 full-time equivalent jobs. As a share of GDP, the new tariffs place among the top 20 largest tax hikes since 1940 — a genuinely historic fiscal shift, implemented through trade policy rather than conventional tax legislation.
If you're American, budget for continued upward pressure on clothing, footwear, and vehicle prices through the rest of 2026 and into 2027 — the long-term price effects shown above persist even after initial adjustment. If you're outside the US, watch how this affects your own country's exports to America and, by extension, your own currency and inflation, since major US trading partners are directly affected by these rate changes.
The Bottom Line
An 18.6% average effective tariff rate — the highest since 1933 — is a genuinely historic shift in US trade policy, with real, measurable costs already showing up in specific product categories. Whether this framework holds through ongoing legal challenges remains uncertain, but the price increases on shoes, clothes, cars, and food are already being felt by American households today, disproportionately by those with the least room in their budgets to absorb them.